F&E Credit-3 - Brownfield Property Tax Credit

This article was updated on May 12, 2023, pursuant to law changes as reflected in Public Chapter 0086 and the Tennessee Works Tax Act (2023). The previous version of F&E Credit – 3 is available here.

Effective July 1, 2023, Public Chapter 0086 makes changes to Tennessee’s brownfield tax credit. The credit amount is 50% of the purchase price of brownfield property purchased in a tier 1 or tier 2 enhancement county and 75% in a tier 3 or 4 county. A qualified development project in a tier 3 or 4 county also qualifies for a brownfield credit equal to the remediation costs incurred on the project.

Remediation costs are costs directly related to the investigation, remediation, or mitigation of a brownfield property as required by a voluntary agreement or consent order. There is a $500,000 credit cap for qualified projects in tier 3 and 4 counties and the credit may offset up to 100% of the combined franchised and excise tax liability.

Any unused credit may be carried forward for 25 years.

To qualify taxpayers must:

• Make a capital investment of at least $25,000,000 in a tier 1 or 2 county; or
• Make a capital investment of at least $5,000,000 in a tier 3 or 4 county.

The capital investment may include real property, tangible personal property, and computer software, as valued under GAAP, and must be made within a five-year investment period. Capital investments for investment periods beginning prior to July 1, 2020, must be considered separate from capital investments for investment periods beginning on or after July 1, 2020. Brownfield property is considered separate from the capital investment that must be made during a specified investment period; therefore, brownfield property that is acquired prior to July 1, 2020, could still qualify for the credit, under PC 606, in conjunction with an investment period that begins on or after this date.

Taxpayers must  file an Application for Best Interest of the State Determination and Brownfield Tax Credit Business Plan  with a copy of the voluntary agreement or consent order that qualifies the property as a brownfield property attached.  Please see page 2 of the Plan or the Department’s Franchise and Excise Tax Manual for more information. Also, you may contact Susan Amin in the Department’s Franchise and Excise Tax Division at (615) 532-6394 or susan.amin@tn.gov for more information on filing a business plan.

Reference: Tenn. Code Ann. §§ 67-4-2009(8); 67-4-2009(9); 67-4-2009(10).